Correlation Between E For and Infraset Public

Can any of the company-specific risk be diversified away by investing in both E For and Infraset Public at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining E For and Infraset Public into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between E for L and Infraset Public, you can compare the effects of market volatilities on E For and Infraset Public and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in E For with a short position of Infraset Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of E For and Infraset Public.

Diversification Opportunities for E For and Infraset Public

0.59

Correlation Coefficient

E For  Infraset Public

Very weak diversification

The 3 months correlation between EFORL and Infraset is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding E for L and Infraset Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infraset Public and E For is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on E for L are associated (or correlated) with Infraset Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infraset Public has no effect on the direction of E For i.e., E For and Infraset Public go up and down completely randomly.

Pair Corralation between E For and Infraset Public

Assuming the 90 days trading horizon E for L is expected to generate 1.52 times more return on investment than Infraset Public. However, E For is 1.52 times more volatile than Infraset Public. It trades about 0.21 of its potential returns per unit of risk. Infraset Public is currently generating about 0.15 per unit of risk. If you would invest  13.00  in E for L on September 5, 2024 and sell it today you would earn a total of  15.00  from holding E for L or generate 115.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

E for L  vs.  Infraset Public

E for L

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in E for L are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, E For sustained solid returns over the last few months and may actually be approaching a breakup point.

Infraset Public

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Infraset Public are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Infraset Public sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with E For and Infraset Public

The main advantage of trading using opposite E For and Infraset Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E For position performs unexpectedly, Infraset Public can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Infraset Public will offset losses from the drop in Infraset Public's long position.

The idea behind E for L and Infraset Public pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.